Gig Economy: Update
If the most recent high-profile case involving Hermes hasn’t triggered employers to start thinking seriously about how it defines its works; it should.
In the summer of 2018, Hermes drivers were ruled to be workers under UK employment law which entitles them to employment rights such as minimum wage and holiday pay. The ruling was described as ‘landmark’ by media and legal outlets. Landmark or not, it was certainly a prime example of the biggest issue facing the gig economy: classic exploitation under a new name.
Tom Roache, the GMB’s general secretary, described the ruling as a ‘nail in the coffin of the exploitative bogus self-employment model’ and while his language is emotive, he is probably factually correct.
The real issue with the gig economy is that the conflict between customer expectations, shareholders’ interests and the interest of employees is self-evident. Clients expect delivery to be on time, to be collected in a quality vehicle but a knowledgeable driver and to have their food arrive while it is still hot and presentable but nowhere more so than the gig economy does responsibility for these expectations fall more firmly on the worker than the boss.
Worker? Employee? Self-employed?
Whether staff are classified as an employee, a worker or as self-employed contractors has a significant bearing on their rights and also the regimes surrounding income tax, national insurance and workplace pensions.
As is common in these matters, the real world has changed but the law has not yet caught up. Employment law is certainly within the running to consider itself the fastest moving area of practice in the United Kingdom albeit usually in respect of discrimination matters un the Equality Act. The last major statutory overhaul of employment status was the 1996 Employment Rights Act which gave us the worker/employee classifications in the first place.
The way people work has changed significantly since then with ONS figures suggesting that since the turn of the century more than 2 million more people are now classed as self-employed. Many of these will be gig economy workers who are classed as self-employed either through ignorance or by choice of their employer to use legal loopholes to circumvent the rights associated with being a worker.
What has not changed is the principle of fairness and equality which may of us would want to see applied to our work environments. If an individual can prove he does the same job as an “employed” person, it is only right that he should be given the same rights as those employees.
Existing case law suggests that there is a clear pattern of finding that members of the gig economy are more likely than not to be at least workers if not employees:
Uber Drivers (October 2016): Worker
CitySprint Couriers (2017): Worker
Deliveroo (2017): Self-employed (ruled by the CAC)
Pimlico Plumbers (2018): Worker
Hermes (2018): Workers
Hermes and the GMB managed to construct a deal to offer workers the chance to be deemed ‘self-employed plus’ workers. It is an innovative solution to a modern problem where the law has not yet caught up with the real world and has the potential to form the foundation for a new type of employment status.
For Hermes, couriers who choose to take this new self-employed plus route will be eligible for up to 28 days’ paid annual leave on a pro-rata basis and will earn above the national minimum wage at £8.50 per hour. They will be required to stick to Hermes’ pre-determined delivery routes; a significant element of the ‘control’ by Hermes which defines their drivers as workers in the first place.
The new status is contractual between Hermes and its couriers and has not yet been tested as to its validity by the Employment Tribunal. Nevertheless, it is a shrewd and timely solution to a contemporary issue when the gig economy is clearly a booming sector. Hermes have managed to step outside the previously routine cycle of tribunal hearing and appeal to present a solution which deals with the actual issue and their solution is quite elegant.
It seems unlikely that this will lead to any substantial legislative change in the near future but employers with a foundation in the gig economy and who rely on ‘self-employed’ status are being sent two very clear messages:
Firstly, by the Tribunal and Court system itself that it is no longer acceptable to take advantage of legal loopholes to bypass workers’ rights.
Secondly by the gig economy sector itself that there are solutions and there are alternative models.
The Hermes model may not work for every business. The new ‘self-employed plus’ workers remain under the control of their employer for route delivery and this triggers obvious business management questions about effective time management and the degree of engagement these individuals have with the customer. It is for each business to come up with its own solutions unless and until legislative change is effected.
That said this is an exciting time to be engaged in any work or business model which involves the gig economy. As an innovating area of industry it is inevitable that it will continue to come up with new ideas, structures and the inevitable legal issues which follow but also for solutions to these issues which suit everyone.
Chris is an employment solicitor at Neale Turk Rochfort. Views expressed in this article are personal to the writer and do not necessarily represent the views of the firm or its individual partners.